Exercise 2 Assignment Example | Topics and Well Written Essays - 1250 words

Exercise 2 - Assignment Example What would be the incremental effect on the companys overall profit of reworking and selling the material rather than selling it as is as scrap? Question 11: A study has been conducted to determine if Product A should be dropped. Sales of the product total $200,000 per year; variable expenses total $140,000 per year. Fixed expenses charged to the product total $90,000 per year. The company estimates that $40,000 of these fixed expenses will continue even if the product is dropped. These data indicate that if Product A is dropped, the companys overall net operating income would: Question 12: The Kelsh Company has two divisions--North and South. The divisions had the above revenues and expenses. Management at Kelsh is pondering the elimination of North Division. If North Division were eliminated, its traceable fixed expenses could be avoided. The total common corporate expenses would be unaffected. Given these data, the elimination of North Division would result in an overall company net operating income of: Question 14: The management of Heider Corporation is considering dropping product J14V. Data from the companys accounting system appears above. In the companys accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $211,000 of the fixed manufacturing expenses and $172,000 of the fixed selling and administrative expenses are avoidable if product J14V is discontinued. What would be the effect on the companys overall net operating income if product J14V were dropped? Peluso Company, a manufacturer of snowmobiles, is operating at 70% of plant capacity. Pelusos plant manager is considering making the headlights now being purchased from an outside supplier for $11 each. The Peluso plant has idle equipment that could be used to manufacture the headlights. The design engineer estimates that each headlight requires $4 of direct materials, $3